Correlation Between Leverage Shares and JPM BetaBuilders
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and JPM BetaBuilders at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Leverage Shares and JPM BetaBuilders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leverage Shares 3x and JPM BetaBuilders China, you can compare the effects of market volatilities on Leverage Shares and JPM BetaBuilders and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Leverage Shares with a short position of JPM BetaBuilders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and JPM BetaBuilders.
Diversification Opportunities for Leverage Shares and JPM BetaBuilders
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leverage and JPM is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and JPM BetaBuilders China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM BetaBuilders China and Leverage Shares is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Leverage Shares 3x are associated (or correlated) with JPM BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM BetaBuilders China has no effect on the direction of Leverage Shares i.e., Leverage Shares and JPM BetaBuilders go up and down completely randomly.
Pair Corralation between Leverage Shares and JPM BetaBuilders
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 20.31 times more return on investment than JPM BetaBuilders. However, Leverage Shares is 20.31 times more volatile than JPM BetaBuilders China. It trades about 0.04 of its potential returns per unit of risk. JPM BetaBuilders China is currently generating about 0.07 per unit of risk. If you would invest 80.00 in Leverage Shares 3x on November 28, 2024 and sell it today you would lose (4.00) from holding Leverage Shares 3x or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 3x vs. JPM BetaBuilders China
Performance |
| Timeline |
| Leverage Shares 3x |
| JPM BetaBuilders China |
Leverage Shares and JPM BetaBuilders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and JPM BetaBuilders
The main advantage of trading using opposite Leverage Shares and JPM BetaBuilders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, JPM BetaBuilders can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in JPM BetaBuilders will offset losses from the drop in JPM BetaBuilders' long position.| Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x |
| JPM BetaBuilders vs. JPM BetaBuilders China | JPM BetaBuilders vs. JPM AC Asia | JPM BetaBuilders vs. JPM BetaBuilders Treasury | JPM BetaBuilders vs. JPM Research Enhanced |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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